Unfortunately, all of these are limiting variables. There are examples of very profitable firms and corporate structures that enable a very profitable model. I’m not discounting the profitability of the Big5 consulting firms. Consulting firms are generally limited to the number of consultants. Corporate culture are defined by the people.

The number of billable hours is a limiting factor. There are only 8760 hours in a year. You can’t work every hour. You can’t bill every working hour. It’s just not possible. Billable hours are the currency of consulting and legal firms. Many firms require 1700-2300 billable hours/year. Just think about this: 2300 hours/year = 46 billable hours/week + 2 weeks of vacation. If you assume a 80% utilization rate, i.e., 80% of your time is billable and 20% is on overhead/email/meetings/etc. To achieve 46 billable hours you need to work 57.5 hours per week.

So for an independent consultant billing at $200/hour on a 57.5 hour work week at 80% utilization would have revenues of $460,000/year. This is an extremely high rate. Looking at the NASDAQ 100 using Cognizant averages $35,892 versus Apple ($1,014,969), Ebay ($551,049), Microsoft ($663,956) and others. This might be a little extreme. Don’t believe me, Hoovers.com suggests that IT/software consulting has average revenues of $160,000/employee (MarketResearch.com has this closer to $100,000/employee). Realistically the easiest way for a consulting firm to achieve exponential growth is to grow to the number of consultants working. And the risk of exponentially growing the number of consultants is that you kill the culture that attracts many people in the first place.

“But isn’t the consulting company itself startup? No, not generally. A company has to be more than small and newly founded to be a startup. There are millions of small businesses in America, but only a few thousand are startups. To be a startup, a company has to be a product business, not a service business. By which I mean not that it has to make something physical, but that it has to have one thing it sells to many people, rather than doing custom work for individual clients. Custom work doesn’t scale. To be a startup you need to be the band that sells a million copies of a song, not the band that makes money by playing at individual weddings and bar mitzvahs.” – Paul Graham

That said, consulting is a great way to take the risk out of a startup. The best consulting projects are the ones where you can build the software you want to sell as a product. This assumes that you have necessary legal agreements where you retain ownership of the intellectual property created during the consulting gig. This is often referred to as “bootstrapping” (read Paul Graham’s Fundraising Survival Guide to understand the tradeoffs).

There’s nothing wrong with consulting. It’s a perfectly viable career. It’s a perfectly viable business model. But do the math, it doesn’t scale like a product company.

Each milestone is a small miracle—from idea to prototype, from first employee to first customer, from first revenues to first profits and eventually to a thriving, successful business. Most startups fail along the way.

To survive this journey, startup entrepreneurs need many things. They need access to funding and talent. They need support from their government and their community. They need opportunities to educate themselves and their team.

But more than anything else, startup entrepreneurs need each other.

Toronto, Waterloo, Montreal, Vancouver, Ottawa, Calgary, Halifax. We’re all very lucky. We have growing, thriving communities of entrepreneurs. We’re connected to each other. It is our responsibility to help each other. To make the connections. To build the fabric. To call bullshit. To build the next great thing.

This is beyond just casual connections. We have a lot of disparate resources and individuals. I’m not suggesting that we need “one ring to rule them all” but that we need to do a better job helping entrepreneurs connect with each other. And this will requires a personal commitment to an open, creative community and conversation. We need to build something like the PSL Values.

Philly Startup Leaders Values

We know our niche: startup entrepreneurs.Our focus is our advantage.

We are a community.Starting a company alone is painful. Along the way, our greatest need is the company and support of entrepreneurs like ourselves.

Our community depends on deep, open and frequent communication.This kind of communication is essential for our members to get to know and trust each other. As an organization, we earn the trust and loyalty of our members by communicating with them in the same way.

We believe in lean and flexible leadership.Bureaucracy and hierarchy tend to stifle entrepreneurs.

We don’t replicate other organizations and events in our ecosystem.Instead, we support other organizations by partnering. We produce only unique and complementary content.

We encourage entrepreneurship within our organization.Any member can champion a cause they believe in. When they do, they have access to the same resources the leaders do.

We believe that entrepreneurs of all experience levels should mentor one another.We have all had great teachers, and it’s our responsibility to give back to our community. This includes our fellow entrepreneurs and those who ought to be.

We love our city and our region.We walk the same streets as Benjamin Franklin, an entrepreneur whose inventions and institutions have survived for generations. We are inspired by our history and proud to be writing its next chapter.

What can I do?

Participate.This is the very first step. Blog. Tweet. Comment on posts. Share links. Attend events. There are lot of events designed to help entrepreneurs connect with other entrepreneurs and others in the community. In Toronto, check out the YouSayYeah Community Calendar. In Vancouver, check out the Bootup Labs Events page. In Montreal, check out TechEntreprise. Use social media to connect with others. The reason we started StartupNorth was to make it easier to find out about Canadian startups.

Patronage. It might sound a little like protectionism, but it’s about supporting your community. What was the last product or service you purchased from a startup? From a local startup? If you work for an established company, you should be looking for tools, people, companies, products that give you a competitive edge. Look for vitamins or painkillers, remember this is not a charity activity (though it often feels like it). We are all looking for competitive advantages, and there are lots of startups with new solutions to problem. Look at StartupIndex to find new startups. If you’re a startup, and you want some additional coverage, drop us a note (but check out previous stories iLoveRewards, GigPark, make it easy for us to write a story about why people care).

Provide feedback. When you find a startup, an entrepreneur or a product that only sort of fits what you are looking for, share the information back with the company. Help them build a better product by giving them customer or potential customer feedback. What were the key features that were missing? What was wrong with the pricing model? Why won’t it work in your corporate IT infrastructure? This is valuable information that a lot of young startups need to gather to iterate and improve their offering.

Celebrate failure.Did you take a job working for an established company because your startup failed? Share your stories about what worked, what you did wrong, what you’d do differently if you could do it again. How? See # 1. Hire a failed entrepreneur (I know I appreciate the opportunity provided by Microsoft Canada to be startup guy in Canada running BizSpark). We’re all in this together, it feels like I’ve been working with and for startups since the beginning of time. And if I’m lucky, I’ll be doing this for many years in the future. And I know I’ll have a few great stories about what I did wrong.

It’s up to all of us to celebrate the startup successes and failures in Canada. Personally, if you’re a startup I’d love to hear what you think StartupNorth should do to help you. Please comments with your suggestions for stories formats, events, site improvements, etc.

“I believe this Nation should commitment itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to earth. No single space project in this period will be more impressive to mankind, or more important for the long-range exploration of space; and none will be so difficult or expensive to accomplish." – John F. Kennedy

Yesterday was the 40th Anniversary of the lunar landing. The Apollo program is an interesting concept for early-stage startups. It was a self-imposed race to beat the Soviets. A lot of startups need to feel the pressure to succeed, and having timelines, constraints and competition often helps amp up the sense of impending doom.

For the Apollo program there was competition. There were extreme timelines. There were budget constraints. All of these were much bigger and longer than the plans for startups. But there was a clear goal (“landing a man on the moon and returning him safely”), and constraints (“before this decade is out”). And most importantly the money wasn’t the end, it was a necessary means to accomplish the larger goal.

Clear Goals

Beating the Soviets. Recovering national pride after the failed Bay of Pigs invasion. It was an effect of the Cold War. But there was competition. The historical analysis of the program looked at a variety of success factors including Big Hairy Audacious Goals that included:

“a chance of beating the Soviets by putting a laboratory in space”

“a sporting chance of sending a 3-man crew around the moon ahead of the Soviets”

“an excellent chance of beating the Soviets to the first landing of a crew on the moon (including return capability, of course)”

The definition of goals included both the engineering constraints but also a prediction of the potential of the competition. Startups need to set big goals. The goal should specify the desired outcome, not the path/method for achievement.

Competition

The goals need to be in context of their operating environment including that of their competitors. I really hate when an entrepreneur tells me they have no competitors. The number of times that this is true is rare. Most companies and products have competition. Stop being afraid to talk about your competition. Understanding where you fit in the competitive landscape can help you figure out your product offering, your time to market, potential marketing events. It makes it a lot easier to know who is the bad guy? Trust me, you should be diligent and honest about who you are competing against. Having a clear competition makes it easier to see where you should spend marketing dollars, what conferences to attend or avoid, and build strategies that either embrace or ignore the competition.

Constraints

Money is one of the easiest constraints to understand. Unfortunately, when you’re working part-time out of your basement/garage/spare room, you don’t have the impending sense of doom that money is a constraint. The runway for side projects is a long. I think this leads to thinking that raising money is the end goal. “We’ve raised a million dollars”. This is meant to be the beginning of the journey. The money is for a purpose, it’s meant to help you grow, build, market, acquire, etc. Raising money enables you to do the real work. It allows you to either increase the rate of acceleration or lengthen the runway. But it’s just the beginning. Equally said, SR&ED is a great benefit to companies, however, when you decide to focus on SR&ED credits to keep the company afloat instead of finding new customers you’re doing the wrong thing.

Money in the bank/Monthly expenses = How long until we are dead – Phil Morle

The change over the past 20 years is that the monthly expenses have decreased. It no longer costs hundreds of thousands of dollars for hardware, development environments, net access, etc. The price of servers continues to fall, and with the advent of cloud computing and dynamic loads it is becoming variable with the load on your site or application. Development environments are free. Usually the single biggest cost for a startup is talent. Oh wait, you’re not paying yourself and you don’t have any employees. This has 2 side effects, it reduces the monthly expenses thus lengthening the runway, but it can also have adverse side effects like not forcing entrepreneurs to be self critical of their ideas and their progress.

Pick a date in the future (this is point D on Figure 1). Let’s say 18 months from now because that’s roughly what John Doerr of Kleiner says is good runway. And then begin working backwards, determine the point where you will need raise more money or find a paying customer (this is point C). This point needs to be a few months before the end of the runway to allow you a margin of error and the time necessary to close financing or the deal. Continuing backwards in time, you need to be at feature complete (point B on Figure 1). Yes, there is a long time between points B & C but this is to allow you to drive adoption, build press and momentum and refine your existing product and pricing. It brings us to right now, what is the minimum feature set that you can plan, design, build, test and deploy between now and 6-12 months from now.

Lessons for Startups

“Startups fail from a lack of customers, not product development failure” – Steve Blank

Allan & Steve from LessEverything have a great list of rules for web startups. I learned a lot about # 9 at Nakama. It was all about staying just ahead of the growth curve, and near real-time scheduling. The piece that was missing from our efforts was a revenue model (who paid us for what). And I think that # 1 & # 7 are key for most web startups. Figure out who pays you and why. Then build a product that they love, that they will evangelize for you.

Build something people need and love. People will talk about it.

Release, release and release. Release it before you think it’s ready, you’re wrong, you don’t need that feature.

Your app will probably fail, most of them do.

Be Ballsy, don’t follow the herd, make a courageous moves.

Build something you want to use. Continue to use it, feel the user’s pain.

Google Adwords isn’t a revenue model.

Find the cheapest, fastest way to 500 paid users. People will pay for your app, if it’s good.

Design is an iterative process, not just development. And you won’t get it right the first time, so don’t sweat so much.

Don’t scale until you actually need to. (The front page of Digg does not count as need.)

Is a company that is built to exit the same as a company that is built to flip? Not in my opinion. Understanding how to build a company that is attractive to a potential acquirer can help entrepreneurs understand how to build product suites, acquire customers and pick technologies.

Possible Exits

The Modified Nike Maneuver: Just Take It (basically preferred shares that pay a huge dividend)

The Liquidation

Selling to a Friendly Buyer

The Acquisition

The IPO

For me, #3 and #4 are almost identical. And #2 is not something you should aim for just staring out. Liquidation is something that happens at the end of your business. Whether it is something that happens in bankruptcy or other it is not a useful model when you are trying to grow a business. So if you merge #3 & #4 it leaves you 3 realistic exit strategies. This is not rocket science.

When I talk to startups everyone seems to think that acquisitions are a dime a dozen. That even based in Toronto, Montreal, Ottawa, Waterloo that they are prime acquisition targets for Microsoft, Google, Oracle, Cisco and other Valley companies. Which surprises me! Sure all of these companies have done Canadian acquisitions, they are the exception and they are done for very specific reasons.

Key takeaways from this, at least if you want to be acquired by Microsoft: you really need to expect to be in business for at least seven to 10 years; you need a lot of traction and a product that people have been using for awhile; enterprise software is hot, consumer web services are not; and you need to have a fit to their strategic plans.

Companies get bought for a variety of reason:

technology;

customers;

people/talent;

the scale for monetization offered by a corporate giant.

It starts to make a very short list for entrepreneurs about what’s important regardless of the type of exit you’re looking for. You need to have technology, customers, the right talent and a path to monetization. Companies are looking for technologies that solve problems with shared customers and that round out their offerings (then there is a the whole question about do we build it or buy it). They are looking for great teams of engineers, sales people, designers, i.e., the talent. And often large public companies bring a scale and access to market and manufacturing that are just not available to startups without huge amounts of cash.

Does this all sound familiar? It’s pretty similar to investment criteria. There’s nothing wrong with building defensible technology that solves a problem for customers with a team of rockstars on a common technology platform.

“I am very pleased to announce today at Mesh09 the development of http://toronto.ca/open, which will be a catalogue of city generated data. The data will be provided in standardized formats, will be machine readable, and will be updated regularly. This will be launched in the fall of 2009 with an initial series of data sets, including static data like schedules, and some feeds updated in real time.

The benefits to the city of Toronto are extremely significant. Individuals will find new ways to apply this data, improve city services, and expand their reach. By sharing our information, the public can help us to improve services and create a more liveable city. And as an open government, sharing data increases our transparency and accountability.”

I have started to think about how we inspire and encourage the community to both build applications, but also businesses on top of the newly available data to help improve city services. The first spot that I’ve started to look is at the Sunlight Foundation’s Apps for America contest, which was aimed at encouraging “more programmers to leverage public data and connect different information sources to effectively convey information about politicians and Congress.” The contest announced $24,000 in prizes ($15,000 + $5,000 + 4*$1,000).

This is an interesting model and I suspect that for the ~$25,000 we’ll see a variety of other interesting applications like those submitted for Apps for America. I wonder if there are ways to encourage and inspire beyond the civic developers. I’m wondering if there is an opportunity to build new applications for civic engagement or local commerce or for improving the lives of citizens and businesses.

The Knight Foundation was 3 rules to apply for funding: 1) use or create digital, open-source technology as the code base; 2) Serve the public interest; 3) Benefit one or more specific geographic communities. The Foundation was founded around news and communities. And it’s interesting to look at ways to inform, engage, visualize neighbourhoods, information, and community.

If you have a great idea that will improve local online news, deepen community engagement, bring Web 2.0 tools to local neighborhoods, develop publishing platforms and standards to support local conversations or innovate how we visualize, experience or interact with information, we’d like to see it! You have the opportunity to win funding for your project and support within a vibrant community of media, tech, and community-oriented people who want to improve the world.

Here’s the Top 100 Foundations in the US. And it appears that Canadian foundations only have about 3% of the assets available to similar organizations in the US (though the site hasn’t been updated since 2006). Mostly because I’m wondering how we find a champion outside of local government to champion the development of new citizen based tools built on this emerging data.

I’ve had a fascination with startups since the mid-1990s. I’ve worked for a few software startups of various sizes. I hope that I’ll be able to work for a successful software startup in Toronto. I read Paul Graham’s commentary about startups, startup hubs,Silicon Valley, and why creating a strong startup hub in Toronto is going to be very difficult. I read this and I also think that Paul is focused on bringing startups to his Silicon Valley (Y Combinator is headquartered in Mountain View [April 29, 2009]) and this may influence his results. However, his logic is really good. Joey has written extensively about “Ideas to steal from Silicon Valley & Seattle”. I don’t want to rehash the basic logistics of what parts we can repurpose locally.

But he hits on 2 unexpected methods for helping to put regions on the map.

Random factors

Government policy

In my humble opinion, much of the Toronto startup activity falls in the “random factors” category. I like many of the startups and founders in Toronto want to be here. We choose to be here.

Silicon Valley is where it is because William Shockley wanted to move back to Palo Alto, where he grew up, and the experts he lured west to work with him liked it so much they stayed. Seattle owes much of its position as a tech center to the same cause: Gates and Allen wanted to move home. Otherwise Albuquerque might have Seattle’s place in the rankings.

Many of the startups and founders in Toronto feel the pull, i.e., the gravitational forces, of existing startup hubs. Look at companies like Kontagent that have offices in SF and Toronto. Founders either succumb to the gravitational forces, or for random factors choose to stay in a location. And many choose to stay, or return to Toronto after relocating to the greener pastures of Silicon Valley. There are many cultural, socio-economic and political reasons to be in Toronto.

Another method presented is that governments can stoke change and a self-sustaining startup ecosystem.

The most likely scenario is (1) that no government will successfully establish a startup hub, and (2) that the spread of startup culture will thus be driven by the random factors that have driven it so far, but (3) that these factors will be increasingly outweighed by the pull of existing startup hubs.

It’s possible that like Quebec, we might be able to create a series of funds and make it possible to pay startups to relocated. I’m not suggesting that Quebec is paying entrepreneurs to move to Montreal. I’m suggesting that with the creation of large enough funds and great people, like Austin Hill, John Stokes, Chris Arsenault and others, Quebec, has gone a long way to creating the potential for “self-sustaining chain reaction[s]”.

But I suspect that it is the random factors that will matter most. It is the people that choose to live in Toronto because of culture, the transportation system, the healthcare, the diversity, openness, etc. Read Who’s Your City? for more details about the factors that make a city attractive for different life stages. But it says that setting up an startup accelerator will make no difference on the startup scene.

People sometimes think they could improve the startup scene in their town by starting something like Y Combinator there, but in fact it will have near zero effect. I know because Y Combinator itself had near zero effect on Boston when we were based there half the year. The people we funded came from all over the country (indeed, the world) and afterward they went wherever they could get more funding—which generally meant Silicon Valley.

The decision to evaluate the methods, activities and benefits of running a cohort based program for startups should not be based around a theory that it will create a self-sustaining chain reaction of startups. We need to look at the motivations for different groups in running a regional incubator (I hate this term, it’s like we’re hatching eggs). If a startup accelerator/incubator/early-stage fund is the answer, I’m left wondering what was the question.

Maybe the question is: how do we make Toronto more “attractive and supportive of enterprising individuals and innovative new businesses”? – Opportunity for Entrepreneurship [PDF] – Martin Prosperity Institute

“Schumpeter described the entrepreneur in heroic terms, standing above the crowd and creating new market spaces, or more favourable conditions for others to follow.”

Many of the activities discussed in Incubators, accelerators and ignition, are about the infrastructure and benefits to entrepreneurs that a cohort-based funding, training, and mentorship program could bring. Providing access to a common legal documents and a funding coupled with mentorship, training and access to markets is the key benefit of the systematic approach.

Researchers have detailed the fundamental characteristics that must be present within the regional economy to support start-ups – access to finance, business mentorship supports, access to markets, however, only recently have efforts been made to systematically understand why some regions are fruitful regions for entrepreneurs while others stagnate.

…

This is likely owing to the size and sophistication of the local market, access to networks extending both locally and afar, and the fact that many highly-skilled entrepreneurs will be drawn to these regions for their institutional resources and cultural amenities available in these larger metros.

The goal is not to replicate Silicon Valley, but to provide a stronger, supportive and more attractive market to enterprising individuals and new businesses. We need to identify the paths, and celebrate the stories and people in our community. We need to build a culture of connection to help provide entrepreneurs access to the networks and markets.

We are NOT Silicon Valley. Nor should we strive to be.

We need to look at the world-class events, activities and people in the city. Like:

It’s not a comprehensive list. It’s not meant to be all inclusive. They are people and institutions doing things in Toronto, differently. They are part of the random factors that keep me in Toronto. We need to look at the business models, the networks, the access to markets (locally, nationally and globally) that we, as a community, bring.

</rant>

Next up: Access to finance, access to mentorship, access to markets, and building buzz.

I wonder if the best Toronto specific program would include a distributed community approach to access the available resources. There is a strong community and a strong series of events that could facilitate a similar program locally. The community of entrepreneurs can find a way to build a similar program informally using many of the existing events and activities.

A Cohort

This is easy enough to define, however, potentially difficult to recreate in a distributed manner.

Y Combinator, LaunchBox, TechStars, Capital Factory all use an application process and timelines to define a cohort of companies. The number of companies is defined by the amount of available resources:

Available funding

Mentor availability

Training spots

The process should be easy to replicate from the above mentioned incubators. Plus all applicants must present their idea using Ignite format or a demo at a DemoCamp style event. The goal would be to help identify the best prospects, create excitement to find potential funding or at least to fine them the appropriate first mentors.

Having a shared space helps to begin to build shared experiences. Like grad school, where everyone shares the triumphs and challenges because of the close proximity. It’s not dependent to have a shared office space, but common meetings, shared mailing lists, badges of honour, and shared timelines can help entrepreneurs feel part of something that is bigger. As the program evolves it becomes a shared pedigree, much like an alumni program. You can see this developing from the Y Combinator cohorts, i.e., YC Summer 08, TechStars 08 etc.

Mentorship and Networking

There are a great number of individuals engaged in the community with varying levels of success and experience. Many of these folks would make great mentors, they just need to be asked and engaged. Here is my list of folks that need to be involved (in no particular order):

There are mentors in Toronto. It’s just a matter of finding the right people based on the company and problem space. The question is how to compensate a mentor/advisor will need to be addressed at some point. But I think that at this early stage, most mentors should be doing this to help young entrepreneurs. Compensation is something that each of the new school incubators solves with their funding equation. Not always possible during these early stages, most mentors can look to programs like TiE or CYBF which are volunteer driven programs. The goal should be to provide time-limited direction and guidance based on domain expertise. The CYBF program requires that mentors meet with a startup for “ a minimum of 4 hours per month”. This is one lunch a week. It also limits the number of startups that each mentor should engage with.

Training

A program should take advantage of the existing training opportunities and create a few new opportunities.

Founders Lunch – run by John & Gosia at LearnHub. Great way for entrepreneurs to connect with each other. No funders or others around.

Founders & Funders – a monthly opportunity to connect with other founders and the people that fund companies. This will include invitees from Toronto, Montreal, Waterloo, Vancouver, Boston and Silicon Valley.

Refresh Events – interesting mix of technology, marketing, entrepreneurship and design training lectures at the Centre for Social Innovation

This training coupled with a weekly dinner program with a guest speaker from the local community. The weekly dinners will serve as a coming together point for the cohort, but also as a great introduction to the cohort. There is the question of cost. But obviously it might be limited by the resources and the size of the cohort. There will be lots of pho, dim sum, and pizza.

Funding

Every time I try to run the numbers it doesn’t make any sense to run this as a fund. The fund is too small to operate on the fees and the carry. And unfortunately, I don’t know a single individual that is willing to use $10M and try this as an investment thesis. Or a group of angels that need this for dealflow and risk reduction. There are some funds (GrowthWorks, JLA/BlackBerry Fund, ExtremeVP, iNovia Capital, TechCapital) that are doing seed stage funding in Canada. It is extremely difficult to run an early-stage fund of this nature and make the numbers work for operations and to compensate a staff to run it.

There is an opportunity to create a Farm Team Fund (FTF) that assume a zero IRR and start funding these early stage entrepreneurs. The funding is a big challenge. We need to make sure both the extremely early capital and the follow on capital is available to help these companies sustain until profitability.

Timelines

Capital Factory = 10 weeks

TechStars = 12 weeks (May to August)

Y Combinator = ~12 weeks (June – August)

Seedcamp = 1 week + 12 weeks

LaunchBox = ~12 weeks (May 18 – Aug 5)

Looks like 3 months is the magic number. That makes the 32 week program (October to May) for MaRS Entrepreneurship 101 program too long. The program needs to be focused on generating successful companies and entrepreneurs quickly.

Attention

What are the premier potential events in Toronto? DemoCamp? Mesh? OCE Discovery? Are any of these events equivalent of Demo or TechCruch50 or Y Combinator Demo Days? What is the event that attracts press, later stage investors, potential acquirers to find out about these companies? How do we highlight the great startups that are happening?

This is the one thing missing from the local ecosystem. A killer launch event. Currently if you want real attention, you are probably launching at a US event. In Vancouver, there is LaunchParty which turns out is cofounded by the team running BootupLabs which were part of the BarCampVancouver, DemoCampVancouver and NorthernVoice teams. It’s one moDemoCampToronto is a good starting point, however, it was designed as a monthly gathering for the local entrepreneurial technologists and designers to share what they are working on. It is a good local event for driving attention, attracting and hiring talent and getting that first sanity check.

What’s next?

It’s possible for local entrepreneurs to replicate many of the features of the new school venture creation programs. The funding challenges related to a zero IRR can make this a challenge, but Rick and others have stepped up to the plate to bring attention to bear and hopefully solve this for early-stage entrepreneurs. It would be a lot easier to start with an application and funding process, the $6,000-$30,000/founder isn’t a lot of money, but it does help pay the rent and food bill during the 12 week dash.

Are there a group of young entrepreneurs that want a program? Are you looking for a 12 week startup program in Toronto?

I had a great lunch with Don Dodge about the legacy of print operations and the economics of manufacturing and distribution that will continue to hinder print based publications. Don has written about newspapers dying since 2006. The decline of the newspaper is the result of a rise in a decline of subscriptions, a decline in advertising and classified advertising, and a continued rise in production and distribution costs. This has coincided with the rise of alternative online sources for advertising, news, and classifieds. This is not a new phenomena.

After a fun, heated discussion with Richard Stursburg, EVP English Services of the CBC at Interactive Content Exchange (IN09), I started to realize the problem.

Future of the Medium, Part Two – The New Rules

Canadians are sometimes divided about the role of the state in the funding of media content and services. We do know however, that creative industries have become a large and growing economic engine. Most governments, especially in the prevailing economic conditions, recognize the value of job creation and investment.

We are already the 3rd largest developer of video games in the world. Yet it is still extremely difficult for interactive media companies to access the capital they need to grow in Canada. So as the manufacturing sector melts away, is this a new area for potential growth? Or are we too late?

It was a fun conversation. It was very weird to be the only panelist on stage actively tweeting the conversation [1, 2, 3, 4, etc.]. It was amazing to hear comments along the lines of “Beautiful, highly produced, professional content can only be created by organizations like the CBC”. The argument that Stursburg was making is that we shouldn’t like old media producers, broadcasters and newspapers go under because the future is unknown. We won’t have high quality content, whatever the hell that means, if we don’t provide government bailout moneys to support old Canadian media monopolies. I find the FUD factor incredibly high and un-nerving. It ignores competition, changing culture, and reinforces the wealth of an elite group. It plays to the fear of people. And it’s couched in the most absurd arguments around Canadian culture. That only existing broadcast players can fund, validate and manage Canadian content (only if we give them further tax credits and government support). It is the belief that broadcast media is the default media. That "high-production-quality” as determined by television is what the funding from an ISP tax should go towards. This completely ignores shifting media consumption behaviours of youth, it ignores the changing landscape of always one, always connected, multiple device content, and it ignores the increasing amount of data and news being created in multiple channels.

Video Killed the Radio Star

Sure the revenue models that will support emerging content business are still being defined. We’re starting to see the creation of distribution channels like games and XBox Live that can support artists and content producers. Sure, the middlemen hate the shift in power and wealth with emerging distribution models. “Aerosmith has reportedly earned more from Guitar Hero : Aerosmith than from any single album in the band’s history.” There are new models emerging for content financing, production and distribution. And they are probably different than the entrenched players that got rich off television and radio. The financing models are still emerging, but we have examples of movies, video games, advertising, etc.

What’s next?

“So this is what the old-growth forests tell us: there is going to be more content, not less; more information, more analysis, more precision, a wider range of niches covered. You can see the process happening already in most of the major sections of the paper: tech, politics, finance, sports.” – Steven Johnson

Steven Johnson gave a great talk at SxSW about the recent history of publishing and distribution of news. His vision includes a role for organizations like CBC and other traditional media outlets. The validation, accreditation, accountability and editing of the abundance of news and news sources. The goal is to build relevance, trust and accountability for news consumers. To be agile and embrace new distribution and business models. To embrace new mediums, why do I need a Kindle when I have a laptop, an iPhone and a Blackberry. The question is how can old media embrace and monetize this brave new world.

“But it’s also bad news because it’s going to distract us from the long-term view; we’re going to spend so much time trying to figure out how to keep the old model on life support that we won’t be able to help invent a new model that actually might work better for everyone” – Steven Johnson

What role should policy play in:

Culture & Heritage

Education & Training

Trade & Commerce

As Canadians, we should be asking for smarter government, better policy and a plan for the uncharted future. Not a life support system for an existing set of players.

Great Companies

Dave McClure has a great pitch presentation. It’s all about the information that investors, VCs in particular, want to see. It’s a great summary about how investors want to see a company, the problem, the technology, the market and the secret sauce presented. My favourite is that Great Companies do 1+ of the following: